Mark Cameron is executive director of Canadians for Clean Prosperity, and a former policy adviser to Prime Minister Stephen Harper.
Prime-minister-designate Justin Trudeau and his team could be forgiven for wanting a break after the long federal election campaign, but that is a luxury they will not have.
Within 40 days, the new prime minister and the premiers will face the challenge of presenting Canada's action plan on climate change at the COP 21 United Nations conference on climate change in Paris. Furthermore, the Liberal platform calls for a federal-provincial meeting within 90 days to develop a new climate framework and emissions targets – an ambitious agenda, to say the least.
Under the outgoing Conservative government, Canada was on track to miss its Copenhagen climate targets of 17-per-cent reduction below 2005 levels by 2020, just as the previous Liberal governments failed to meet our Kyoto targets.
Setting impressive targets and failing to meet them has become an unfortunate Canadian tradition. As Mr. Trudeau himself has said, "What we need is not ambitious political targets. What we need is an ambitious plan to reduce our emissions in the country."
What then should that plan look like? As most free-market economists recognize, the most effective way to reduce emissions is to price them through a carbon fee or carbon trading system, and let the market find the least costly path to reducing emissions.
The Liberal plan is based on working with the provinces and helping them develop and implement their own climate policies, including carbon pricing. This approach makes sense, as within a year, the four largest provinces representing almost 80 per cent of Canada's economy and Canada's greenhouse gas emissions will have their own carbon pricing systems in place.
Provincial economies vary greatly, and a one-size-fits-all policy may not produce fair and equitable outcomes for every province. But a patchwork of provincial systems of varying stringency could lead to failure as well. So if some provinces are slow to act, the federal government should bring in a minimum national carbon price as a backstop. This price should start at British Columbia's current level of $30 per tonne, and increase after that.
However, Mr. Trudeau's government should commit that any revenues raised by a federal carbon fee within a province will be sent back to that province. Carbon pricing should not become a revenue-raising tool for Ottawa. Furthermore, the federal government should encourage provincial governments to return carbon revenues back to their own households and job creators as tax cuts or credits. A revenue-neutral carbon price ensures that every dollar taken from the economy in carbon fees is returned to consumers and businesses to help them choose less carbon-intensive alternatives.
Lastly, the federal government has an important role to play in protecting the competitiveness of Canada's trade-sensitive industries by bringing in border carbon adjustments such as tariffs on carbon-intensive products or rebates on carbon fees paid at the border. Ottawa can ensure that Canadian industries won't suffer because of our choice to price carbon.
Canada has an historic opportunity to turn the page on two decades of failed climate policy. For far too long, climate policy has been a political football between those advocating environmental action and those arguing for greater economic growth. But as Mr. Trudeau has said, "In the 21st century … the environment and the economy go hand in hand."
By taking real action on climate while cutting costs for Canadian taxpayers and job creators, he can reconcile the values of left and right on an issue that truly affects us all.
Through strong national leadership, Canada's provinces can develop systems that suit their economies and keep them competitive, and protect Canadian taxpayers while we finally make progress on reducing greenhouse gas emissions. That's a plan the new prime minister and the premiers could be proud to bring to Paris.